Banks (especially large, global ones) have been trying to build an enterprise-wide view of risk for several years to enable them to respond to crises armed with full knowledge of all their market, credit, liquidity and counterparty risk. Such risk data management projects took on urgency when Lehman Brothers collapsed and when some large players had to scramble to figure out the full extent of their exposure to the fallen firm. Better and more comprehensive views of risk will also become more necessary as the Dodd-Frank risk reporting rules and Basel III take effect.
GoldenSource says today that it has created a program that provides pre-built views of all these risks, in a product called RiskHub.
In an interview this morning, Mike Meriton, CEO of GoldenSource, said that RiskHub is a repackaging and repositioning of its basic data normalization, standardization and integration software, with additional ability to capture credit risk data and with prebuilt integration with widely-used risk applications such as RiskMetrics and Algorithmics.
"The inspiration for this product came to us because quite a few customers over the last 12 months have been working on enterprise-view-of-risk projects," Meriton says. "Their risk departments are being overhauled to manage enterprise risk, they had to have a data hub that could then be part and parcel to their enterprise risk application, such as Algorithmics or RiskMetrics." The company decided to target a version of its product to this use case.
One challenge of trying to create an enterprise view of risk is that different applications use different entity identifiers and metadata, such that even if you build connecters to funnel data from different applications into a central repository, the data doesn't necessarily match up in a consistent, meaningful way.
To overcome this challenge, RiskHub has one physical data model that captures a 360-degree view of risk including securities data, underlying reference data, transaction data from in-house settlement and clearing systems, entity data, counterparty data and credit data. It can capture loan data as well as issue and issuer ratings information, Meriton says, and it maps all the information from internal and external sources in a consistent manner to the format required by risk applications. An optional add-on to RiskHub, called RiskMonitor, provides an additional layer of data visualization and business intelligence.
Three banks are already in the process of installing RiskHub, Meriton says.